WASHINGTON – National Farmers Union President Roger Johnson testified before the U.S. House of Representatives Committee on Agriculture Subcommittee on General Farm Commodities and Risk Management today, reviewing commodity programs for the 2012 Farm Bill. Johnson urged committee members to include provisions to deal with a long-term collapse in commodity prices.
“The farm bill passed by the Senate Committee on Agriculture contained a number of positive aspects, but one thing that it did not include was a way to deal with a long-term commodity price collapse,” said Johnson. “The farm bill must include a program such as the Market-Driven Inventory System (MDIS), which helps to ensure commodity prices do not fall to a price where family farmers can no longer make a living. MDIS utilizes a system of farmer-owned commodity inventories, loan rates, and other policy tools to accomplish this goal. Alternatively, increased and balanced target prices can be designed to cushion the impact of very low commodity prices, although this approach is likely to cost more.”
Johnson also emphasized the need to look at long-term cost savings of farm bill programs rather than just short-term costs.
“When writing the next farm bill, lawmakers must be penny-wise but not pound-foolish,” said Johnson. “MDIS will have a cost, but as the study by the University of Tennessee demonstrates, it will save money in the long term. Permanent disaster programs, too, save money. For example, the United States spent $30 billion between 1996 and 2002 in emergency and ad hoc disaster programs to help farmers and ranchers when prices collapsed and the farm bill had no safety net for them. The cost to extend the Supplemental Revenue Assistance Payments Program (SURE) and similar disaster assistance programs for five years, which could have replaced those ad hoc disaster programs, is $8.9 billion.”